In the Cardano community, a debate has erupted regarding the conversion of 140 million ADA to the stablecoin USDM. This initiative by the platform's founder, Charles Hoskinson, has elicited mixed opinions.
Proposal by Cardano Founder
Cardano's founder, Charles Hoskinson, proposed converting 140 million ADA, worth roughly $100 million, from the network’s treasury into the USDM stablecoin. The aim is to enhance stablecoin liquidity in Cardano's DeFi ecosystem and stimulate its growth. Hoskinson presented the idea during a recent AMA, suggesting the operation could be executed through OTC deals and TWAP strategies to prevent significant price disruptions.
Criticism and Concerns
Not all community members have embraced this proposal. One vocal critic, a Decentralized Representative (DRep) known as Whale, expressed his concerns on X. He noted that stablecoin liquidity is indeed a problem for Cardano, but warned that injecting $100 million worth of ADA into the market could create dangerous sell pressure. Hoskinson, however, is confident that the conversion will not crash ADA’s price and insists that proper execution will allow the market to absorb the transaction.
Implications and Next Steps
The debates surrounding this initiative highlight a broader challenge in the crypto space: how to grow an ecosystem without harming the asset that funds it. Hoskinson argues that if the community believes in the ecosystem's growth, the market will absorb the transformation without significant consequences for the price. Yet, given the current market conditions, the question of how to utilize treasury funds and manage risks is becoming particularly relevant.
Hoskinson's proposal to convert $100 million ADA into a stablecoin underscores the complex challenges facing Cardano. The future of this initiative will set the tone for DeFi ecosystem development in 2025.
